Manufacturing dips again on tepid global demand
FACTORY output contracted for the eighth consecutive month in September, leaving the economy still teetering on the edge of a third-quarter technical recession.
Manufacturing contracted 4.8 per cent last month - slightly worse than the 4.5 per cent decline tipped by private-sector forecasters.
The dip signals that there is still no turnaround in sight for beleaguered manufacturers hit by lacklustre global demand.
The volatile biomedical cluster was the strongest performer in September, surging 26.3 per cent over the same month a year ago thanks to higher pharmaceuticals and medical technology output.
If biomedical manufacturing is excluded, overall manufacturing output would have fallen a steeper 10.2 per cent.
However, Barclays economist Leong Wai Ho noted that there was no sharp spike in actual biomedical output last month. In fact, much of the cluster's apparent strong performance was due to a low base in the same month last year.
The only other bright spot was the chemicals cluster, where output rose 4.4 per cent over the same month a year ago.
Meanwhile, transport engineering recorded the largest plunge in output at 24 per cent. The electronics, precision engineering and general manufacturing clusters also registered declines.
Economists said yesterday's weak manufacturing data underscored worries that Singapore slid into technical recession during the July to September quarter.
Advance estimates, which take into account data from the first two months of the quarter, showed that the economy grew 1.4 per cent in the quarter compared with the third quarter last year, and 0.1 per cent compared with the preceding three months, narrowly averting a technical recession.
A technical recession is defined as two consecutive quarters of decline in economic output.
Whether such a recession materialises when the final statistics for the third quarter are released next month depends on the performance of the services sector, which makes up two-thirds of the economy, said DBS economist Irvin Seah.
The sluggish manufacturing industry is expected to continue weighing on overall economic growth well into next year.
CIMB Private Bank economist Song Seng Wun said manufacturing is headed for its worst year since the global financial crisis, with no pickup in sight.
"Unless there is a meaningful global rebound, it might be the second half of next year before we see positive year-on-year growth in manufacturing. Even then, it will partly be due to base effects," he added.
"In the meantime, we will have to rely on the services industries to lift the economy over the next few months."